Lack of Differentiation Forced LG Smartphone Exit, Says Gartner

LG’s inability to come up with a “differentiated offering” to retain or win market share led to its exit from the mobile phone space, Gartner analyst Anshul Gupta told us Monday, after LG said it was exiting the “incredibly competitive” mobile phone segment. Getting out of mobile business will allow LG to focus resources on other markets, including electric vehicle components, connected devices, smart home, robotics AI, business-to-business solutions and platforms and services, it said.

LG’s global market share in 2020 was 1.7%, said Gupta; it was a top-five supplier in 2015, “and it has been on decline since then.” The mobile phone market “is competitive and consolidating towards fewer players with ability to offer differentiated products to bring unique value benefits,” said the analyst. He declined to comment on other smartphone companies on the brink of exiting the market. Gupta said vendors focusing on the midpriced segments, mostly in the U.S. and Latin American markets, will be among those benefiting most from LG’s departure.

LG will provide service support and software updates for customers of existing mobile products “for a period of time” that will vary by region, said the company. It will work with suppliers and business partners, and employment for employees in the mobile segment will be determined locally. The wind-down will be completed by July 31, though inventory of existing models may be available after that, it said.

Moving forward, LG will “continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas,” it said. Core mobile technologies developed during its two decades of mobile business operations will be applied to existing and future products, it said.

In Q1 2015, LG regained the No. 5 global share position from Xiaomi, shipping 15 million smartphones worldwide, reported IDC, on a “diverse portfolio” ranging in price, features and design (see 1504290036). Two years later, it lost global share to Oppo, which had gained share in the Southeast Asia market.

LG launched the high-end G7 ThinQ smartphone in 2018 at a time when premium smartphone sales had slowed amid longer life cycles. At the phone's New York debut, executives acknowledged the new trend, with phones expected to last beyond the traditional two- to three-year life cycle. AI would help extend the life span of a smartphone through continuous software upgrades, LG Electronics North America then-President William Cho said at the event. Then-Senior Vice President-Marketing David VanderWaal told us LG was making a “dramatic switch” by “not forcing consumers to buy a new phone.”